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Income Tax Appellate Tribunal, MUMBAI BENCH “SMC” MUMBAI
Before: SHRI S. RIFAUR RAHMAN & SHRI RAVISH SOOD
ORDER PER S. RIFAUR RAHMAN, A.M. The captioned appeals filed by the Revenue are directed against the respective orders passed by the CIT(A)-33, Mumbai dated 28.11.2019 for AYs 2009-10 & 2010-11. As the issue involved in the captioned appeals are inextricably interlinked or in fact interwoven and having common issue, the same are therefore being taken up and disposed off by way of a consolidated order. Facts being identical we begin with the AY 2009-10.
Ramniklal K. Vora 2 & 740/M/2020 2. At the outset, it is noticed that none appeared on behalf of assessee in spite of calls and even no application for adjournment was moved. On the other hand, Ld. DR is present in the court and is ready with arguments. Therefore, we have decided to proceed with the hearing of the case ex-parte with the assistance of the Ld. DR and the material placed on record.
The brief facts of the case are, the assessee is engaged in the business of manufacturer of readymade garments under the name and style Unique Creations. The assessee filed his return of income on 15.10.2010 u/s 139(1) of the Income Tax Act, 1961 declaring total income of Rs.8,52,093/-. The assessment was completed u/s 143(3) and subsequently, the case was reopened u/s 147 of the Act. Accordingly, assessment was completed u/s 143(3) r.w.s 147 of the Act by the AO thereby making 100% addition on account of bogus purchases. On the basis of information from the Investigation Wing regarding bogus purchases made by the assessee from the following parties : Sr. No. Name of the Partly Amount (Rs.) 1. Trichipuram Trading P. Ltd. 10,400/- 2. Pooja Traders 3,00,062/- 3. Aadeshwar Enterprises 3,76,475/- 4. Mayur Trading Co. 4,18,882/- 5. Amit Trading Co. 5,99,737/- 6. Trade Link 7,28,342/- Total 24,34,798/- 4. Aggrieved by the above order of AO, assessee preferred appeal before Ld. CIT(A) and Ld. CIT(A) after considering the submission of assessee.
However, the Ld. CIT(A) agreed with the AO that the above parties figured in the Sales Tax Department’s list of suspicious dealers who issue accommodation entries without actual delivery of goods. However, the assessee has shown onwards sales which has not been doubted by the AO. By Ramniklal K. Vora 3 & 740/M/2020 relying on various case law, he reduced the disallowance @ 25% of bogus purchases and partly allowed the appeal of the assessee.
Now before us, the revenue has preferred appeal by raising the grounds of appeal
as under:-
1. On the facts and circumstances of the case in law, the Ld. CIT(A) has erred in restricting addition made by the A.O amounting Rs.17,19,761/-100% of total purchase to 25%, ignoring the fact that the action of the Assessing Officer was based credible information received from the Maharashtra Sales Tax Department and that the see, during the course of assessment proceedings, failed to prove the genuineness of the purchase transactions.
2. On the facts and in the circumstances of the and in law, the Id. CIT(A) has erred in estimating addition on account of bogus purchase to 25% of such purchases as against the estimation the AO of 100% of bogus purchases without appreciating the fact that the assessee had failed to establish the genuineness of the alleged parties whom purchases is claimed to have been made during the year.
3. On the facts and in the circumstances of the and in law, the Id. CIT(A) has erred in estimating addition on account of bogus purchase to 25% of such purchases as against the estimation the AO of 100% of bogus purchases without appreciating the fact that the assessee could neither produce the delivery challans or the transport bills/invoices nor could produce the alleged parties from whom purchases is claimed to have been made during the year.
4. On the facts and in the circumstances of the and in law, the Id. CIT(A) has erred in estimating addition on account of bogus purchase 25% of such purchases as against the estimation the AO of 100% of bogus purchases without appreciating the fact that the Sales Tax Department well as the DGIT (Inv.) Mumbai during their course of investigations found the alleged parties be providing only accommodation/bogus purchase bills.
5. On the facts and in the circumstances of the and in law, the Id. CIT(A) has erred in estimating addition on account of bogus purchase to 25% of such purchases as Ramniklal K. Vora 4 & 740/M/2020 against the estimation the AO of 100% of bogus purchases without appreciating the ratio of the decision of the Hon'ble Supreme Court in the case of N.K. Proteins Ltd., wherein the Court has held that when the purchases are from bogus suppliers, the entire purchases are liable to be disallowed.
This case is filed because it is covered under the exception provided in para 10(e) of the "s Circular No. 3 of 2018 dated 11.07.2018 as amended vide F.No.279/Misc.142/2007-ITJ(Pt) dated 20.08.2018.
6. Considered the submission of Ld. DR and material placed on record. We are of the considered view that no doubt the purchases made from the suspected parties are not genuine. However, the purchases itself cannot be doubted as rightly adjudicated by Ld. CIT(A) that AO has not doubted sales declared by the assessee, only he suspects the purchases. Even the revenue raised grounds of appeal mainly on the purchases not being genuine. Ld. CIT(A) has considered the corresponding onward sales and came to the decision. By respectfully following the decision of Hon’ble Gujrat High Court in the case of CIT vrs. Smith P. Sheth 356 ITR 451 (Guj), we are inclined to agree with the findings of Ld. CIT(A). Therefore, grounds raised by the revenue are dismissed.
Facts being identical, our decision for AY 2009-10 applies mutatis mutandis to AY 2010-11. 7. In the result, the appeals filed by the revenue are dismissed.
Order pronounced in the open Court on 05/08/2021.